The problem with dogma… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on March 08, 2000 at 11:12:20:
is that rational discussion goes out the window. Quoting Kiyosaki as if he were Scripture is bogus- it precludes analysis of alternate theories and facts. This approach is fantastically closed-minded.
Understanding what Kiyosaki says and WHY he says it then applying it to the facts is key. To wit:
Kiyosaki reccomends building cash flow so you don’t have to work. Having money is not necessary to build cash flow, but sure is helpful. Jacob is certainly building capital given his cash-out methodology. Depending on the differential between the price at which he sells for cash and the price at which could sell a MH on a note, his annual return by cashing out is 99.9999% likely to be well-above that generated by Lonnie deals. These massive chunks of change he’s generating are in turn reinvestyed in more flips- generating even more capital. Unless I’ve missed the mark on Jacob, that capital will eventually be reinvested in income-producing assets other than MH notes. Depending on the velocity of turnover on his deals, he has a very strong chance of producing MORE cash flow in hassle-free investments using this method than he would on classic Lonnie deals. This is not meant to denigrate Lonnie’s methodology. Rather, it is a twist- and depending on how the flip proceeds are invested- an improvement. Part of deciding if Jacob’s method is an improvement over Lonnie’s awesome ideas turns on subjective issues- perception of hassle & risk when it comes to mobile home notes and WHEN one wants the cash flow.
Whether I personally cash out or carry depends on the MH in question. I carry on cheap homes with large mark-ups. I intend to cash out on the more expensive, longer term notes. The fixed transaction costs incurred upon cashing out are much easier to bear on a larger, as opposed to smaller, investment. For example, I will keep an $8000, 4-year note created with $2000 of investment because the yields are good and the cash out cost ($600 to $1500) are high in proportion to the final amount of cash received. But a $15,000 8-year note in which I have $4300 is a great candidate for cash-out- the yield is lower on the note, and the $600 to $1,000 cost of cashing out is low compared to the cash received.
If Jacob simply spends his cash out proceeds on doodads, he is tying himself to a job- a sacrifice he may be willing to make, depending on his personality and goals. If he eventually creates cash flow with his rapidly growing pile of payola, he is consistent with Kiyosaki’s philosophy and thereby conforms with the dogma.
And if he doen’t conform with the dogma- so what. I happen to like Kiyosaki’s points and agree that cash-flow is what I EVENTUALLY want. Not everyone agrees.
If you are going to attack someone:
- Check your premise;
- Be ready to argue on other premises;
- Examine the facts;
- Argue based on said facts;
- Make a constructive point;
- Lose the 'tude.